Why an IRA Can Be One of the Smartest Ways to Save for the Future
Planning for retirement can feel overwhelming, especially when it might be decades away and you have immediate and pressing financial needs. It can feel hard to justify putting away money for the distant future when you need new tires on your car, when your kids have outgrown their shoes, or even when you just want to be able to relax and take a vacation.
However, the earlier you start saving, the more time your money has to work for you. It’s estimated that:
$1 invested in your 20s could be equal to $7–$10 saved later in life.
$1 invested in your 40s could be equal to $2–$3 by retirement.
Doing a little work to save early makes your savings more efficient and powerful. And one of the best ways to start saving for the future is with an Individual Retirement Account, or IRA.
What Is an IRA?
An IRA is a tax-advantaged account designed to help you save and plan for retirement. In an IRA, your money can grow over time while you also benefit from tax incentives that help you keep more of what you earn.
You have two IRA options when choosing what type of retirement account to open:
Traditional IRA: Contributions may be tax-deductible now, and you pay taxes when you withdraw in retirement
Roth IRA: Contributions are made with after-tax dollars, but withdrawals in retirement are tax-free. There are certain restrictions regarding how much you can contribute annually, and they are updated yearly.
Both options provide a powerful advantage: compound growth over time.
The Power of Starting Early
As mentioned, the money you save earlier in life can have an outsize effect. The earlier you start, the more your money can grow—even if you’re contributing relatively small amounts.
Let’s look at a simple example:
You invest $200 per month starting at age 25
You earn an average annual return of 7%
By age 65, you would have approximately $525,000
Now compare that to starting later:
You invest $200 per month starting at age 35
Same 7% return
By age 65, you would have about $245,000
Getting started later gives your money less time to grow. Of course, any amount of saving at any age can benefit your retirement goals but early savings go further with less effort. Consider
How to Use an IRA to Work Toward a Comfortable Retirement
If retirement feels uncertain, you’re not alone. The majority of Americans feel behind on retirement savings, and only about one-third of Americans believe they’ll have enough money to live comfortably in retirement. Using an IRA can be a beneficial way to save for retirement because of the:
1. Tax Advantages
Depending on the type of IRA you choose, you may be able to reduce your taxable income now or to enjoy tax-free withdrawals later. Either way, you’ll give yourself added benefits that can increase your potential savings.
2. Compound Growth
You may have heard the adage that “the most powerful force in the world is compound interest.”
When you save money over time, you’ll earn dividends. Those dividends then generate their own earnings, which can grow exponentially over time. For example, a one-time investment of $6,000 could grow to around $45,000 over the course of 30 years.
By just letting your funds sit and grow, you’re increasing value without contributing another dollar. When that money is growing tax-free in a Roth IRA, the earnings become even more powerful.
3. Flexibility
You have the opportunity to invest as you desire in an IRA, whether you prefer a low-risk option that earns dividends or prefer an option that offers other categories of investment (like stocks or mutual funds).
4. Accessibility
For some investment options, like a 401(k), you have to be employed by a company that provides a retirement plan as an option. An IRA, in contrast, can be opened by anyone. You can make contributions as you are able (up to the annual threshold), so you can set aside a consistent amount or can make larger contributions when you are able (tax returns, holiday gifts, etc.).
How to Start Saving in an IRA
Starting your IRA can take just minutes and can be easily done from your own home.
Step 1: Choose the Right IRA
Ask yourself:
Do you want tax savings now or later?
What is your current income level?
Do you expect to be in a higher tax bracket in retirement?
A Roth IRA is often appealing for younger savers, while a Traditional IRA may benefit those looking for immediate tax deductions.
Step 2: Open an Account
You can open an IRA easily and can fund it through your existing accounts.
You can start the process online by sending a secure message through Digital Banking
If you are not sure which type of IRA you want to open, or if you have other questions, you can also visit a branch to complete the opening process.
Step 3: Start Contributing
Each year, the IRS sets an upper limit for IRA contributions. In 2026, the limit was set at $7,500. If you’re not able to save the full amount each year, that’s perfectly fine. It’s best to just get started and save what you can, so those dollars can start working for you.
Setting up weekly or monthly automatic transfers can make it easier to save, because the savings happen behind the scenes. If you set up a monthly transfer of $100 to your IRA, you’ll have $1,200 at the end of the year. Setting up a weekly $25 transfer would give you $1,300 at year’s end.
As your income grows, you can also work to increase your contributions, bumping them up just a little each month and seeing where that added growth takes you.
Starting to save in an IRA empowers you to prepare for the future. Every dollar you put away is a step toward being stronger and more confident about the future you want. If you need help getting started with an IRA or planning for your long-term financial goals, we are here to work with you, plan with you, and help you get started on the path to achieving a strong financial future.
